I recently spoke to a group of commercial real estate brokers about the legal aspects of the leasing business. One question that garnered significant attention related to indemnification provisions in lease agreements. These brokers represent both landlords and tenants in lease deals and routinely run into a negotiating hurdle about indemnification. Landlords often demand that the tenant indemnify them against a host of potential problems but are reluctant to give tenants a similar level of protection. The brokers reported difficulty in bringing the two sides together over this issue. One broker said that a major lease negotiation broke down over this issue alone. This is an avoidable problem. If the parties understand the differing degrees of control and exposure perhaps indemnification will not pose such a challenge to these negotiations.

What is “indemnification“? – a party’s agreement to pay the liability, and in some cases, the defense costs and damages, of the other party if a claim is asserted by a third party.